^ 


258 


1816 


Arg-.iment 

by 
Cephas    Brainerd 


.X; 


^ 


:-'3KW»:;v'i-— -K^j;.  ."vj 


i 


ARGUMENT 

BY 

Cephas  Brainerd,  of  New  York, 

before   the  judiciary  committee  of 
the  house  of  representatives, 

(WITH    ADDITIONS,) 

29TH    January,     1876. 


THE    RIGHTS    OF    THE    UNINSURED    OWNERS    OF    SHIPS    DESTROYED 

BY    THE    NASHVILLE,    TALLAHASSEE,    GEORGIA,    AND    THE 

SHENANDOAH    BEFORE    SHE    REACHED  MELBOURNE, 

TO  PAYMENT  OUT  OF  THE  GENEVA  AWARD, 

SUPERIOR  TO  ANY  OTHER   CLAIMS 

ON    THAT    FUND. 


NEW  YORK: 

GEORGE      F.      NESBITT     &     CO.,     PRINTERS, 
CORKER    OF    PEARL  AND   PINR  STREETS. 


1876. 


XZ3 

to  ARGUMENT 


Mr.  Chahnnan,  and  Gentlemen  O'^  the  Committee  : 

I  do  not  feel  called  upon  to  restate  all  that  has  been  urged 
in   favor  of  the  uninsured  owners  of  vessels  destroyed   by 
the  "  Nashville,"  "Tallahassee,"  "Georgia,"  and  the  "  She- 
nandoah "  before  she  reached  Melbourne.      It  would  be  a 
piece  of  presumption  on  my  part  to  attempt  to  go  over  the 
ground   so  ably  covered   by  Mr.  Metcalf     His   argument, 
just  in  all  its  parts,  remains  unanswered;  it  is  unanswerable. 
As  bearing  upon  the  general  question,  and  also  as  answering 
some  observations  made  here,  I  beg  leave  to  submit  an  argu- 
ment made  by  me  before  the  Judiciary  Committee  of  the  last 
House.     It  will  be  my  attempt,  in  what   I  have  to  say,  to 
^  ;i    meet  all  the  propositions  of  moment  presented  in  the  present 
^    discussion  in  favor  of  the  Insurance  Companies.     Of  course 
^   such  an  argument  must  be  desultory  and  repetitious  in  its 
^  character. 


V      The  able  and  very  accomplished  Counsel  for  the  Insurance 
(j^  Companies  stated   at   the  outset  of  his  argument  yesterday 
'T'^j   various  postulates,  as  he  termed  them,  of  law  and  of  fact, 
^   as  the  basis  of  his  discussion.    These  he  suggested  were  in- 
<^   disputable.     I   may  not   have  understood   them  correctly ; 
^~  but  if  I  did,  then  suffer  me  to  say  that  on  our  side  we  dis- 
^  sent  from  them  wholly.   The  propositions  of  law  are  believed 
^  to  be  without  support  in  the  teachings  of  writers  on  public 
^  law,  and  those  of  fact,  so  far  as  material  here,  were  erroneous 
\  deductions  from  documents  open  to  all  parties,  and  whose 
proper   interpretation  we  are  willing  to  accept.     These  re- 
marks are  made  in  the  hope  that  the  members  of  this  Com- 

425767 


mittee  will  be  induced  to  scrutinize  with  more  than 
ordinary  care  these  "  postulates  "  when  the  printed  argument 
is  laid  before  them.  The  limits  prescribed  to  me  do  not 
allow  a  consideration  of  them  in  detail. 

He  also  objects  to  the  remark  that  his  clients  were  en- 
gaged in  a  speculation,  because  odium  may  How  from  it 
upon  them,  and  as  an  offset  to  this  he  indulges  in  a  high- 
flown  discourse  upon  their  patriotism,  as  if  that  exalted  ele- 
ment entered  into  their  insurance  computations.  We  have 
also  had  suggestions  in  this  connection  about  the  charitable 
character  of  these  corporations.  And  yet  I  am  forced  to 
confess  that  the  popular  impression  is,  that  this  class  of  cor- 
porations in  their  dealings  act  uniformly  upon  a  maxim 
not  found  in  the  decalogue,  the  sermon  on  the  mount,  or 
the  writings  of  St.  Paul,  but  of  a  lower  order  and  a  different 
origin,  viz.,  "  Charity  begins  and  ends  at  home."  Is  it  im- 
proper here  to  suggest  that  there  is  a  slight  inappropriate- 
ness  in  the  observations  made  on  behalf  of  these  corpora- 
tions, to  the  effect  that  the  gentlemen  in  and  out  of  Con- 
gress who  have  opposed  the  views  advocated  by  them  are 
engaged  in  perpetrating  "a  breach  of  national  faith,"  that 
they  are  flagrantly  "violating  an  international  obligation  to 
Great  Britain,"  are  "shocking  the  moral  sense  of  the 
civilized  world,"  "confiscating,"  and  the  like'?  These  are 
hardly  appropriate,  nor  do  they  aid  in  this  discussion.  Liv- 
ing as  my  friends  do  in  "a  city  of  fragility,"  and  having 
huge  conservatories  attached  to  all  their  dwellings,  it  occurs 
to  me  It  would  be  wise  for  them  to  argue  their  cause,  and 
withdraw  ft)r  the  present  from  the  pastime  of  throwing 
stones. 

But  it  is  said  if  the  insurance  companies  had  not  pre- 
sented iheir    "claims,"    the  award  would   have    been    but 


$7,000,000.  This  is  clearly  a  mistake,  for  the  award  was  for 
losses,  not  for  claims,  and  all  double  "claims"  for  the  same 
"losses"  were  rejected.  "And  whereas,  in  order  to  arrive 
at  an  equitable  compensation  for  the  damages  which  have 
been  sustained,"  says  the  award,  not  for  the  "claims"  that 
have  been  preferred. 

So,  too,  the  letters  of  the  Secretary  of  State  acknowledg- 
ing the  receipt  of  the  claims  are  referred  to ;  but  what  of 
them?  Every  man  who  sent  in  a  claim  received  the  same 
sort  ot  letter.  Those  who  lost  by  the  Tallahassee  in  this 
respect  are  on  a  par  with  the  largest  insurance  company. 

The  threat  that  the  insurance  companies  will  refuse  to 
take  war  risks,  if  we  should  chance  to  be  involved  in  another 
war,  I  cannot  meet.  If  it  deters  this  Committee  or  Con- 
gress trom  the  performance  of  an  act  of  justice,  we  can  do 
nothing.  If  it  makes  these  insurance  claimants  ridiculous' 
as  it  certainly  does,  we  are  in  no  position  that  will  justify 
an  objection  on  our  part. 

Ideal  Mutual  Insurance  Companies  have  been  described 
here  by  counsel  as  actually  existing  corporations.  I  venture 
to  say  that  no  such  company  as  has  been  described  exists 
on  this  Continent.  The  Atlantic  of  New  York,  to  which 
constant  reference  has  been  made,  is  not  such.  No  doubt 
it  issues  scrip  payable  at  remote  periods,  and  subject  to 
the  contingencies  of  future  business.  But  here  is  an  existing 
fund,  which  by  the  confession  of  the  mutual  company 
belongs,  not  to  its  present  dealers,  and  ought  not  to  be 
subjected  to  the  contingencies  of  future  business,  but  to  the 
men  who  dealt  with  that  Company  more  than  twelve  years 
ago.  Take  the  Atlantic.  It  has  by  its  own  sworn  reports 
an  actually  invested  capital  or  net  surplus  of  82,633,926.47 


over  and  above  all  debts,  claims,  and  outstanding  scrip, 
[Ins.  ^Report  of  JV.  Y.,  i8j4,  p.  8J4.)  It  mutual,  to  whom 
does  this  money  belong*?  It  seems  to  me  that  it  has 
now  in  hand  an  ample  trust  fund  for  administration,  and 
that  it  is  quite  unnecessary  for  Congress  to  employ  it  as 
an  agent  to  hunt  up  men  who  paid  war  premiums. 

Heretofore  the  argument  in  favor  of  the  insurance  com- 
panies has  proceeded  upon  the  strict  doctrine  of  the  law  of 
subrogation.  And  in  one  of  the  briefs  submitted  by  Mr. 
Evarts,  he  distinctly,  and  in  terms,  said  :  "  The  insurer  d(jes 
not  apply  tor  a  share  of  this  indemnity  because  he  has  lost 
money  during  the  war.  However  that  may  be,  it  gives  no 
interest  in  the  lund."  The  claim  was  a  representative  one 
solely. 

And  why  not  claim  as  a  loser '?  Because  it  is  demonstrable 
from  the  published  reports  of  these  Companies  that  they 
did  not  suffer  loss  by  the  war. 

Take  the  Atlantic  :  Its  losses  for  three  years  next  pre- 
ceding our  war  were  42  per  cent,  on  gross  premiums ;  for 
four  years  during  the  war  46,^0  per  cent,  on  gross  premiums ; 
for  four  years  next  after  the  war  48*0  per  cent.  So  neither 
Company  nor  insured  lost  one  dollar  by  the  war  risks,  nor 
did  insurers  sutfer  a  diminution  in  the  amount  of  dividends. 

Why  then  should  there  be  decreed  a  further  advantage 
to  the  whole  body  of  insurers  ^  The  only  insurers  who 
have  suffered  by  the  war,  are  those  who  paid  war  premiums. 
Why  should  insurance  companies  be  constituted  trustees 
of  war  premium  payers,  when  these  men  are  before  you 
protesting  that  they  do  not  desire  to  be  placed  in  that  sort 
of  tutelage  ? 

And  why  should  the  insurer  under  the  ordinary  risk,  who 
is  shown  by  the  statistics  of  the  Atlantic  to  have  paid  only 
the    ordinary  premium,  and  to    have    received    the    usual 


dividend  back,  be  allowed  out  of  this  fund  a  further 
dividend,  to  the  exclusion  of  the  claims  of  men  who 
suffered  losses  by  those  cruisers,  against  which  our  Govern- 
ment by  its  concessions,  for  great  international  purposes, 
waived  its  claims'?  Hear  the  modest  but  unanswerable 
statement  of  one  of  these  claimants. 

"  Washington,  ^rt/2.,  1874. 
"  To  the  H.  R.  Judiciary  Committee. 

"During  the  war  of  the  Rebellion,  as  a  member  of  the  late  firm  of 
Walsh,  Carver  and  Chase,  I  paid  to  Insurance  Companies  $38,548.48, 
increased  premiums  for  war  insurance,  as  shown  by  policies  now  in  my 
possession.  On  neither  of  these  policies  have  they  ever  paid  a  dollar. 
The  whole  amount  was  profit  to  the  Insurance  Companies.  Two  vessels 
(the  'Delphine'  and  the  '  Alina,')  of  which  my  firm  owned  a  part,  and 
on  which  we  had  no  insurance,  were  destroyed  by  the  *  Shenandoah,' 
before  she  went  to  Australia,  by  which  we  lost  §14,000.  The  Insurance 
Companies  now  claim  that  the  amount  received  from  England,  as  indem- 
nity, should  be  paid  to  them,  added  to  their  profit  of  §5'8,548.48,  and 
that  I  should  have  nothing.  Would  this  be  right  ? 
"  Respectfully  yours, 

"  B.   CARVER,  now  of 

Carver.  &  Barnes, 
No.  30  South  St.,  N.  Y." 

But  should  this  money  go  into  the  hands  of  the  insur- 
ance companies,  when  they  refuse  to  give  any  very  distinct 
information  as  to  what  is  to  become  of  it  ?  They  propose 
to  make  no  pledge,  except  so  far  as  one  counsel  has  stated, 
that,  as  regards  his  clients,  it  shall  go  towards  paying  losses 
suffered  by  them  in  the  Chicago  and  Boston  fires.  While 
one  President  has  promised  to  demonstrate  to  the  Commit- 
tee, that  the  rules  they  have  in  force  for  the  distribution  of 
surplus  earnings,  are  equitable  and  just. 

It  is  openly  suggested  in  the  public  prints,  urged  in  con- 
versations with  members  of  each  House  ot  Congress,  and 
covertly  argued  here,  that  if  this  money  is  not  paid  to  the 


8 

insurance  companies,  Great  Britain  will  have  something  to 
say  on  the  subject.  Tliis  matter  was  partially  stated  by 
Senator  Schurz,  in  his  place  in  the  Senate,  (Cong.  Record, 
1873-4,  p.  3787,)  as  follows: 

"Thus  the  agent  of  the  United  States  repeatedly  declared  before  the 
Tribunal,  that  the  money  to  be  awarded  was  wanted,  not  for  the  United 
States,  to  be  distributed  by  the  Government  in  its  discretion,  arbitrarily, 
but  for  the  satisfaction  of  private  claims,  inclusive  of  those  of  insurers. 
To  repudiate  such  a  declaration  would  be  an  act  of  bad  faith,  of  which 
no  government  which  has  self-respect  ought  to  render  itself  guilty." 

As  to  the  assumption  of  fact,  which  this  extract  contains, 
it  seems  proper  to  say  that  I  am  unable  to  find  any  coun- 
tenance for  it  in  the  record  of  the  proceedings.  I  do  find 
that  our  agent  was  instructed  not  to  do  any  such  thing. 
And  I  am  confident  Mr.  Davis,  our  agent,  would  deny  the 
correctness  of  the  Senator's  statement,  and  that  he  would 
find  an  unqualified  confirmation  of  his  denial  in  the  testi- 
mony of  each  of  the  three  counsel  who  assisted  him  in  his 
^•emarkable  presentation  of  our  case. 

But  the  suggestion  seems  to  me  thoroughly  unpatriotic, 
and  even  craven.  It  could  not  have  had  its  origin  with 
one  of  our  own  citizens.  I  do  not  think  our  people  have 
yet  become  so  degraded  as  to  tolerate  a  presentation  to 
their  Government  of  the  views  of  the  defendant  in  the 
great  litigation,  as  to  the  use  that  shall  be  made  of  tlie  sum 
we  recovered. 

The  British  Government,  in  effect,  disclaims  any  such 
right.  Mr.  Gladstone,  the  Premier  at  the  time,  speaking 
from  his  place  in  the  House  of  Commons,  said :  "No 
claims  of  individuals  have  been  submitted  to  the  arbitra- 
tion in  relation  to  the  'Alabama.'  What  was  submitted 
to  arbitration  was  entirely  a  question  between  the  two 
Governments."  This  is  decisive,  and  accords  with  the 
instructions  to  our  agent.  Confessedly,  the  Government 
has  the  right   to  distribute  this  fund   to  whom  it  pleases, 


9 

according  to  its  own  view  of"  real  justice.  Then  how 
charming  in  its  coolness  would  be  the  diplomatic  interven- 
tion of  Great  Britain,  in  the  question  of  distribution.  How 
im.pudent  and  unfriendly  would  even  its  mention  be  in 
Parliament.  Every  man  who  possesses  a  spark  of  national 
pride  w^ould  spurn  such  an  interference.  The  indignant 
language  employed  by  other  nations  in  like  cases  would 
be  again  evoked.  "•  We  require  no  tutors  to  instruct  us 
how  to  govern  our  own  nation."  ( Wicquefori^  (Digby's  Tr., 
316.)  "It  is  an  unheard  of  thing  that  a  Prince  should 
take  upon  him  to  regulate  the  Council  in  the  Kingdom  of 
another  Sovereign."     {Id.,  320.) 

The  Foreign  Enlistment  Act  of  England  is  held  by  her 
writers  on  public  law  to  relate,  in  its  origin  and  its  pur- 
poses, wholly  to  domestic  affairs. 

Savs  Mr.  Vernon  Harcourt,  in  the  letters  of  Historicus, 
page  151: 

"  Thev  {i.  e.,  carrying  on  belligerent  operations  within  the  territory  of 
a  neutral)  constitute  an  offence  clearly  punishable  at  Common  Law  ;  and 
the  Foreign  Enlistment  Act  can  only  be  regarded  as  a  Municipal  Statute, 
intended  to  provide  a  convenient  remedy  against  all  persons  and  things 
within  the  allegiance  of  the  neutral  Crown.  And  this  is  what  is  really 
meant  when  it  is  said  that  the  Foreign  Enlistment  Act  is  founded  ofi  In- 
ternational Law  :  a  proposition  unquestionably  true,  if  it  is  understood 
of  the  obligation  of  the  belligerent  towards  the  neutral,  and  not  of  the 
neutral  towards  the  belligerent.  Every  State  passes  laws  to  protect  itself, 
and  not  to  protect  other  nations.  It  is  for  this  reason  that  the  English 
Government  has  constantly  refused  to  enact  laws,  either  penal  or  other- 
wise, at  the  instigation  of  other  Governments,  who  suggested  that  they 
might  be  essential  for  their  security.  The  object  of  the  statute  book  in 
these  matters  is  to  prevent  foreign  nations  injuring  us,  not  to  protect  them 
one  from  another." 

Mr.  Seward  ventured  to  take  another  view  of  it,  and  so 
during  the  war,  and  after  the  decision  of  the  Courts  in  the 
"  Alexandra  "  case,  our  Government  became  satisfied  that, 
with  the  views  entertained  by  the  British  Government,  it 
would   be   impossible   to   prevent  the   fitting  out  of  rebel 


10 

cruisers  by  an  entorcement  of  the  Foreign  Enlistment  Act, 
against  the  spirit  then  prevaiHng  in  Great  Britain.  Urgent 
requests  were  therefore  made  to  the  Foreign  Office  by  our 
Government  for  the  enactment  of  a  more  stringent  law, 
coupled  with  offers  to  revise  our  own  statute  on  the  same 
subject,  pursuant  to  suggestions  solicited  by  us  from  Great 
Britain. 

These  suggestions  were  spurned  by  Great  Britain  as  an 
impertinent  interference  with  her  own  domestic  affairs,  and 
Earl  Russell,  September  25th,  1863,  {(Diplomatic  Corres^ 
pondence,  iS6^,  ^Part  1.^  page  ^48)  saw  fit  to  address  Mr. 
Adams  in  the  following  language  : 

"  There  are,  however,  passages  in  your  letter  of  the  i6th,  as  well  as  in 
some  of  your  former  ones,  which  so  plainly  and  repeatedly  imply  an  inti- 
mation of  hostile  proceeding  towards  Great  Britain  on  the  part  of  the 
Government  of  the  United  States,  unless  steps  are  taken  by  her  Majesty's 
Government  which  the  law  does  not  authorize,  or  unless  the  law,  which 
you  consider  insuliicient,  is  altered,  that  I  deem  it  incumbent  upon  me, 
in  behalf  of  her  Majesty's  Government,  frankly  to  state  to  you  that  her 
Majesty's  Government  will  not  be  induced,  by  any  such  consideration,  either 
to  overstep  the  limits  of  the  law,  or  to  propose  to  Parliament  any  new  law 
which  they  may  not,  for  reasons  of  their  own,  think  proper  to  be  adopted. 
They  will  not  shrink  from  anv  consequences  ot  such  a  decision." 

Perhaps  the  famous  Webstcr-Hulseman  correspondence 
shows  most  plainly  the  views  our  Government  would  adopt 
in  case  of  British  intermeddling  in  regard  to  this  distribu- 
tion. It  is  well  known  that  Chevalier  Hiilseman  made  the 
private  instructions  of  Mr.  Clayton  to  Mr.  Dudley  Mann 
touching  his  inquiries  regarding  the  Hungarian  Revolution, 
the  subject  of  a  diplomatic  note.  The  following  is  an  ex- 
tract from  the  reply  ( Webster's  Wcrks^  vol.  6,  p.  601 ) 

"  With  respect  to  the  communication  of  Mr.  Mann's  instructions  to 
the  Senate,  and  the  language  in  which  they  arc  couched,  it  has  already 
been  said,  and  Mr.  Hiilseman  must  feci  the  justice  of  the  remark,  that 
these  are  domestic  affairs,  in  reference  to  which  the  Government  of  the 
United  States  cannot  admit  the  slightest  responsibility  to  the  Govern- 
ment of  his  Imperial  Majesty.      No  State,   deserving  the  appellation   of 


11 

independent,  can  permit  the  language  in  which  it  may  instruct  its  own 
officers  in  the  discharge  of  their  duties  to  itself  to  he  called  in  question, 
under  any  pretext,  by  a  foreign  power." 

And  so  I  dismiss  this  suggestion  of  foreign  intermeddling 
to  the  contempt  it  deserves  at  the  hands  of  those  who  are 
to  decide  the  present  question. 

Much  handle  is  made  of  the  alleged  admissions  made 
arguendo  in  the  British  case,  of  the  applicability  of  the 
doctrine  of  subrogation  to  the  matter  in  dispute.  It  is  quite 
immaterial  what  was  admitted  or  denied  by  opposing  coun- 
sel in  that  controversy  in  regard  to  it.  Great  Britain  was 
utterly  indifferent  on  this  point.  Her  sole  object  was  to 
reduce  the  demand  as  much  as  possible,  and  she  therefore 
sought  to  exclude  the  double  claims. 

But  in  the  course  of  the  arguments  there  is  a  very  re- 
markable passage  by  the  British  counsel.  It  comes  from 
one  of  the  most  eminent  of  equity  lawyers,  living  or  dead. 
Lord  Selborne.     Note  its  import : 

"With  respect  to  the  insurance  companies,  it  must  be  remembered 
that,  as  against  the  losses  which  they  paid,  they  received  the  benefit  of 
the  enormous  war  premiums  which  ruled  at  the  time ;  and  that  these 
wxre  the  risks  ?gainst  which  they  indemnified  themselves,  (and  it  cannot 
be  doubted,)  so  as  to  make  their  business  profitable  upon  the  whole  by 
those  extraordinary  premiums.  Would  it  be  equitable  now  to  reimburse 
tliem,  not  only  the  amount  of  all  these  losses,  but  interest  thereon,  with- 
out taking  into  account  any  part  of  the  profits  which  they  so  received  ? " 
{Papers,  &fc.,  vol.  3,  /;/;.  557,  558.) 

Members  of  the  Committee  will  say  this  is  striking.  It 
has  been  urged  in  other  language  against  the  Insurance 
Companies,  in  these  discussions.  This  is  true,  but  more 
than  this  is  true.  The  principle  of  this  argument  has  been 
adopted  by  this  nation,  and  applied  in  the  distribution  of 
this  award.  The  I2th  Section  of  the  Act  of  1874  pro- 
vides : 

"  And  no  claim  shall  be  admissible  or  allowed  by  said  Court,  by  or  in 
behalf  of  any  insurance  company  or  insurer,  either  in  its  or  his  own  right  ; 


12 

or  as  assignee,  or  otherwise,  in  the  right  of  a  person  or  party  insured,  as 
aforesaid,  unless  sucli  claimant  shall  show  to  the  satisfaction  of  said  Court 
that  during  the  late  rebellion  the  sum  of  its  or  his  losses,  in  respect  to  its 
or  his  war  risks,  exceeded  the  sum  of  its  or  his  premiums  or  other  gains 
upon  or  in  respect  to  such  war  risks ;  and  in  case  of  any  such  allowance, 
the  same  shall  not  be  greater  than  such  excess  of  loss." 

And  here  let  it  be  observed,  Congress,  while  adjudicating 
finally  upon  the  alleged  subrogation  claims  of  the  Insur- 
ance Companies,  has  also  in  terms  recognized  the  right 
of  making  compensation  tor  losses  occasioned  by  other  than 
the  so-called  inculpated  cruisers.  But  it  a  balance  sheet 
which  shall  include  all  the  cruisers  is  to  be  struck  by  Con- 
gress for  the  benefit  ot  insurance  companies  that  actually 
made  losses,  why  should  not  one  also  be  struck  for  the  ben- 
efit of  the  uninsured  owners  who  lost  by  the  "Nashville" 
or  the  "  Tallahassee  "  *? 

Heretofore  the  claim  of  the  Insurance  Companies  has 
been  asserted  upon  what  Mr.  Van  Cott  terms  "  the  techni- 
cal right  of  subrogation."  Mr.  Evarts,  in  his  printed  argu- 
ment, says,  "  if  the  United  States  were  open  to  legal  pur- 
suit," and  Mr.  Van  Cott  says,  "if  they  were  justiceable," 
the  payment  of  this  money  to  their  clients  could  be  com- 
pelled by  bill  in  equity.  Here  is  asserted  a  legal  right,  and 
the  value  of  the  assertion  is  to  be  determined  by  legal  tests. 
The  application  of  these  tests  shows  the  futility  ot  the 
argument.  There  is  nothing  in  the  papers  relating  to  the 
Geneva  Award,  construing  them  justly,  but  most  favorably 
to  these  claimants,  and  giving  them  all  the  legal. effect  that 
they  possess,  that  sustains  this  idea.  There  is  no  process 
of  reasoning  known  to  the  profession,  and  sustained  by  ac- 
knowledged principles  or  adjudicated  cases,  which  would 
justify  a  court  in  decreeing  in  their  favor.     Because  : 

1.  There  are  no  means  for  ascertaining  whether  any  allow- 
ance at  all  was  made  by  the  Tribunal  for  any  specific  loss. 


13 

2.  There  are  no  means  for  determining  what  sum  was 
allowed  on  account  of  the  destructions  of  any  one  cruiser, 
or  for  the  loss  of  any  one  vessel. 

3.  There  are  no  means  for  determining  what^  if  any  al- 
lowance at  all,  was  made  for  any  one  insured  vessel. 

4.  For  aught  that  appears,  no  allowance  whatever  was 
made  for  so  much  of  a  ship  as  was  paid  for  by  the  under- 
writers. 

5.  'Ihere  is  an  award  of  a  sum  in  gross,  which  is  dis- 
tinctly declared  to  be,  — not  for  the  losses  by  any  particular 
cruiser,  or  cruisers  in  a  particular  category — not  for  any  one 
class  of  losses, —  but  for  all  the  claims,  of  whatsoever  name 
or  nature,  referred  by  the  Treaty  to  the  Tribunal.  It  is  a 
general  verdict  on  all  the  issues,  with  a  lump  sum  as  dam- 
ages. 

6.  This  general  finding  and  verdict,  is  a  distinct  denial  of 
all  the  facts  upon  which  the  bill  in  equity  to  enforce  subro- 
gation must  proceed,  and  so  a  Court  ot  Equity  would  hold. 

This  view  of  the  award  is  strikingly  illustrated  by  the 
colloquy  between  General  Butler  and  Mr.  Evarts  reported, 
after  revision,  in  the  printed  argument  handed  to  the  com- 
mittee yesterday,  (see  also  my  argument  ot  1874,  p.  9), 
wherein  Mr.  Evarts  admits  it  to  be  the  duty  of  Congress  to 
pay  all  losses  occasioned  by  the  inculpated  cruisers,  irrespec- 
tive of  their  amount,  whether  presented  at  Geneva  or  not; 
and  by  Mr.  Van  Cott  yesterday,  when  in  response  to  a  ques- 
tion by  Mr.  Frye,  he  stated  that  the  distribution  of  the  share 
of  this  money  alleged  to  belong  to  the  insolvent  Columbian 
Insurance  Company,  "presented  a  case  for  the  prudential 
consideration  of  Congress  as  to  the  disposition  of  the  fund." 
But  if  these  gentlemen  are  correct  in  this,  what  becomes  of 
all  their  arguments'?  And  yet  they  are  unquestionably 
right,  for  Congress  in  its  present  legislation  has  so  declared. 


'4 

while  the  Commission  has  gone  on  making  awards  for  losses 
not  presented  at  Geneva.  Indeed  the  question  has  never 
been  mooted  before  it,  whether  any  one  of  all  the  claims  it 
has  ordered  paid,  was  ever  in  any  form  before  the  Geneva 
Tribunal.  If  Congress  may  exercise  "prudential  conside- 
ration" in  one  case,  why  not  in  others  ? 

The  law  then  is  clear.  The  history  of  the  case  is  in 
harmony  with  the  law.  The  Counsel  for  Great  Britain 
had  objected  that  new  figures  and  claims  had  been  intro- 
duced on  our  part  before  the  Tribunal.  Our  Counsel 
answered  the  objection  by  this  observation,  that  the  point 
raised  was  this^  viz. :  "  Whether  the  Tribunal,  in  the 
exercise  of  the  power  to  award  the  sum  in  gross,  conferred 
upon  it  by  the  seventh  article  of  the  Treaty,  should  limit 
itself  by  the  rules  and  modes  of  proceedings  prescribed  for 
the  Assessors  in  the  tenth  article." 

In  the  argument  of  this  point  our  Counsel  insisted  that 
there  was  nothing  in  the  Treaty  requiring  the  arbitrators 
to  make  their  decision  on  the  examination  of  proofs  fur- 
nished by  the  parties. 

"  The  gross  sum  which  the  Tribunal  may  award  is  to  be  accepted  by 
the  United  States  as  a  satisfaction  of  'all  the  claims  referred  to  it'  (Art. 
VII.),  not  of  all  the  c\-x\-m%  presented  by  them." 

The  italics  are  those  of  our  Counsel. 

"  It  is,  therefore  manifest  that  the  Treaty  contemplated  that  the  indi- 
vidual Arbitrators,  in  reaching  such  a  gross  sum  as  they  might  see  fit  to 
award,  should  have  regard  to  all  considerations  of  damage  or  injury  to  the 
United  States  within  the  scope  of  the  arbitration,  whether  presented  in 
detail  or  not;  and  that  they  should  be  at  liberty  to  award  such  sum  as 
justice  might  require,  without  a  minute  examination  of  detailed  proofs." 
{Papers  relating  to  Treaty  &c.,  vol.  t,,  pp.  634,  63;;.) 

And  so  the  Tribunal  ruled.  {fPapers.  S-c,  vol.  iv.^  p.  42, 
(Protocol  xxvi.)  A  motion  was  made  to  strike  out  sched- 
ules and  estimates  furnished  by  the  American  Counsel. 


15 

"  After  deliberation,  the  Tribunal  gave  its  decision  as  follows  :  The 
Tribunal  does  not  see  fit  to  order  the  withdrawal  of  the  tables  presented 
on  the  part  of  the  United  States,  as  requested  by  Lord  Tenterden  ;  but 
it  declares  that  it  considers  these  documents  only  as  simple  elucidations, 
such  as  were  required  by  one  of  the  arbitrators.  Viscount  d'ltajuba,  to 
which  the  Tribunal  will  give  such  attention  as  is  right." 

Our  Counsel  then  proceeded  to  suggest  general  consider- 
ations, which  they  claimed  should  enter  into  this  general 
estimate,  mentioning  among  other  things  that  each  ship 
must  be  presumed  to  have  a  suitable  complement  of  men, 
and  officers,  and  the  like ;  and  they  contended  that  in  the 
award  of  a  gross  sum,  regard  should  be  had  to  these  losses, 
as  to  which  of  course  not  a  particle  of  real  proof  was  ever 
presented. 

Observe,  in  this  final  argument  on  our  part,  Mr.  Davis 
says  the  Tribunal  "should  have  regard  to  all  considerations 
of  damage  or  injury  to  the  !  United  States,  within  the  scope 
of  the  arbitration."  What  is  the  scope  of  the  arbitration  ? 
Article  I.  of  the  Treaty  answers  :  "  Differences  .... 
growing  out  of  the  acts  committed  by  several  vessels, 
which  have  given  rise  to  the  claims  generically  known  as 
the  'Alabama  claims';"  and  ....  "Now,  in  order 
to  remove  and  adjust  all  complaints  and  claims  on  the  part 
of  the  United  States,  and  to  provide  for  the  speedy  settle- 
ment of  such  claims"  ....  "growing  out  of  acts 
committed  by  the  aforesaid  vessels,  and  generically  known 
as  the  '  Alabama  claims,'  shall  be  referred  to  a  tribunal  of 
arbitration." 

Article  VII.  then  provides,  "  In  case  the  Tribunal  find 
that  Great  Britain  has  failed  to  fulfill  a^ty  duty  or  duties^ 
as  aforesaid,"  [i.  e.,  '  any  of  the  duties  set  forth  in  the  fore- 
gonig  three  rules,  or  recognized  by  the  principles  of  Inter- 
national Law  not  inconsistent  with  such  rules,']  "  it  may  if 
it  think  proper  proceed  to  award  a  sum  in  gross  to  be  paid 


i6 

by  Great  Britain  to  tlie  United  States  for  all  the  claims  re- 
ferred to  it." 

Our  counsel  stated  these  claims  as  follows :  [American 
Case^  (Papdj's,  S^c.^  vol.  i,  p.  185.) 

"  1.  The  claims  for  direct  losses  growing  out  of  the  destruction  of  ves- 
sels and  their  cargoes  by  the  insurgent  cruisers. 

"  2.    The  national  expenditures  in  the  pursuit  of  those  cruisers. 

"  3.  The  loss  in  the  transfer  of  the  American  commercial  marine  to  the 
British   flag. 

"  4.    The  enhanced  payments  of  insurance. 

"  5.  The  prolongation  of  the  war,  and  the  addition  of  a  large  sum  to 
the  cost  of  the  war  and  the  suppression  of  the  rebellion." 

Directly  upon  the  presentation  of  the  American  case 
there  arose  a  general  outcry  from  the  British  nation,  and 
the  arbitration  was  in  peril.  It  was  protested  that  classes 
3,  4  and  5  were  not  contemplated  by  the  Treaty.  Our 
Government  having  clearly  the  right  to  present  these  claims, 
as  was  thought,  a  decision  by  the  Tribunal  was  insisted 
upon.  Our  adversaries  insisted  the  Tribunal  had  no  jurisdic- 
tion of  these  matters.  Finally  the  Tribunal,  without  deciding 
whether  they  had  jurisdiction  or  not,  ruled,  that  if  it  were 
agreed  on  all  hands  that  this  branch  ot  the  case  was  before 
them,  that  "these  claims  do  not  constitute  upon  the  princi- 
ples of  international  law  applicable  to  such  cases,  good 
foundation  for  an  award  ot  compensation  or  computation 
of  damages  between  nations,  and  should,  upon  such  princi- 
ples, be  wholly  excluded  from  the  consideration  of  the 
Tribunal  in  making  its  award."  To  this  our  government 
assented.  {(Papers^  vol.  ^,  pp.  ig-21.)  The  motive  for  this 
assent  appears  from  the  telegram  of  Secretary  Fish,  (2 2d 
June,  1872,  (PaperSj  &c.,  vol.  2,  p.  578,)  in  which  he  says  : 
"  We  had  no  desire  for  a  pecuniary  award,  but  desired  an 
expression  by  the  Tribunal  as  to  the  liability  of  a  neutral 
for  claims  of  that  character." 


Thereupon  the  Tribunal  proceeded  with  the  trial  of  the 
case.  Practically  as  all  familiar  with  the  history  of  these 
transactions  know  this  decision  was  but  a  mode  agreed 
upon  for  fixing  an  additional  article  to  the  treaty,  and 
settling  a  rule  of  law  for  the  future.  No  one  doubts  but  it 
was  a  matter  of  arrangement  between  the  parties  represent- 
ing the  two  governments  at  Geneva,  while  on  its  face  it  bears 
the  appearance  of  a  solemn  and  unsuggested  judgment  of 
the  Tribunal.  These  classes  of  claims  were  then,  by  a 
practical  agreement  between  the  litigating  parties,  not  to  be 
taken  into  account  in  the  estimate  of  pecuniary  damage. 
All  other  claims  were  to  be  considered,  and  the  Tribunal 
was,  if  it  saw  fit,  to  award  a  gross  sum  to  cover  them  all. 

The  VII.  Article  provided  that  the  Tribunal :  (l)  Should 
decide  as  to  each  cruiser.  (2)  Might  award  a  sum  in  gross 
for  all  the  claims  submitted.  (3)  Send  the  case  to  a  board 
of  Assessors  to  pass  upon  each  individual  claim.  Obviously 
the  object  of  the  first  requirement  was  to  obtain  a  ruling 
upon  each  individual  cruiser  for  the  purposes  of  internation- 
al transactions  in  the  future.  This  was  to  be  a  settlement 
of  rules  of  law  for  future  guidance,  and  in  proportion  as 
the  rulings  approached  unanimity  they  possess  value.  As 
to  but  one  ship,  the  "Alabama,"  all  the  arbitrators  agreed 
in  result,  but  as  to  none  was  there  a  full  agreement  in  the 
reasons  of  the  decision.  In  rendering  these  opinions,  and 
making  these  decisions,  the  Tribunal  performed  its  duty  in 
announcing  principles  of  public  law,  as  applied  to  each 
vessel.  They  came  secondly  to  the  question,  should  they 
award  a  sum  in  gross  under  the  VII.  Article,  and  they 
decided  to  do  so. 

So  far  the  record  evidence  excludes  the  idea  of  an  award 
for  specific  loss.  There  are  two  pieces  of  evidence,  of  too 
remarkable  a  character  to  be  omitted  here,  confirmatory  of 


Its 

my  deductions  from  the  record.  Mr.  Davis,  in  his  report 
to  our  Government,  says  {'Taper,  &^c.,  vol.  4,  p.  S,)  "  It  does 
not  appear  in  the  protocols  how  the  arbitrators  arrived  at 
this  amount  {i.e.,  $1  5', ^00,000.)  I  am  informed  it  was 
reached  by  mutual  concessions." 

"  Great  Britain  had  presented  a  table,  composed  in  large  part  of  esti- 
mates, appreciations,  and  arbitrary  or  supposititious  averages ;  in  conse- 
quence of  which  the  United  States  presented  other  tables,  to  which  the 
British  Agent  objected  that  these  tables  comprehended  claimants,  and  sub- 
jects of  claim,  not  comprised  in  the  actual  schedules  filed  by  the  United 
States ;  to  which  the  American  Agent  replied  by  showing  that  the  Tribu- 
nal had  before  it,  in  virtue  of  the  Treaty,  all  the  reclamations  made  by 
the  United  States  in  the  interest  of  individuals  injured,  and  comprised 
under  the  generic  name  of  Alabama  Claims.  Some  discussion  on  the 
sanie  subject  afterwards  occurred  between  Mr.  Staempfli  and  Sir  Alexander 
Cockburn,  which  conclusively  prove  that  the  result  reached  did  not  accept 
as  binding  either  the  tables  presented  by  the  United  States,  or  the  deduc- 
tions therefrom  claimed  by  Great  Britain.  The  estimate  of  Mr.  Staempfli 
seems  to  have  been  the  basis  of  conclusion  ;  and  that  estimate  is  founded 
on  dividing  the  difference  between  the  American  estimate  of  $14,437,000, 
and  the  British  estimate  of  ^7,074,000,  the  mean  of  which  is  $10,905,000  ; 
which  mean  does  not  in  any  sort  represent  the  actual  claims  of  the  United 
States.  Indeed,  one  of  the  arbitrators  expressly  declared  that,  in  arriving 
at  a  conclusion,  the  arbitrators  were  not  to  be  regarded  as  making  an 
assessment,  or  confining  themselves  to  the  schedules,  estimates,  or  tables 
of  either  of  the  two  Governments."  {Cushing^s  Treaty  of  Wash.,  pp. 
166-167,) 

The  Insurance  Companies  say,  give  us  a  chance  to  be 
heard.  What  do  they  mean  ?  Are  they  not  heard  *?  Ever 
since  the  award  was  made,  their  interest  has  been  argued 
and  re-argued,  by  most  eminent  lawyers,  and  the  most  inter- 
ested laymen,  before  the  Judiciary  Committees  of  the 
two  Houses  of  Congress,  and  privately  in  the  ear  of  every 
member  of  either  House  whose  attention  could  be  com- 
pelled. Every  consideration  growing  out  of  the  circum- 
stances connected  with  the  Geneva  Tribunal,  and  out  of  the 
relations  of  the  companies  to    the  claims  as  actually  pre- 


19 

sented,  has  been  urged.  The  whole  case  has  been  heard  by 
men  who  were  both  lawyers  and  statesmen,  as  are  the 
members  of  this  Committee.  And  these  Tribunals  thus 
enlightened,  have  distinctly  decided  against  their  claim,  and 
that  decision  is  of  record  in  the  reports  of  this  Committee, 
and  the  final  legislation  which  created  the  Commission  for 
distribution. 

But  the  corporations  are  not  satisfied  with  these  decisions. 
They  object  to  the  determinations  thus  far  made,  because 
they  are  made  by  men  who  were  both  statesmen  and  law- 
yers, by  men  who  occupied  a  position  which  enabled  them 
to  invoke  Equity  in  its  true  and  popular  sense,  as  one  of 
the  three  instruments  for  reforming  the  law.  They  do  not 
want  this  case  decided  upon  the  general  considerations  which 
weigh  with  the  legislator,  and  in  the  general  mind.  They 
want  a  tribunal  which  does  not  possess  the  power  of  legisla- 
tion, and  they  would  tie  that  tribunal,  if  possible,  down  with 
the  bonds  of  "  the  technical  right  of  subrogation."  This 
right  was  half  recognized  in  a  bill  before  the  last  Congress. 
It  was  discovered  in  the  artful  disguise  of  words  which  was 
thrown  around  it,  and  the  statute  as  it  now  stands  shows  how 
carefully  Congress  excluded  the  idea  from  its  action. 

The  doctrine  of  subrogation,  though  called  a  rule  in 
equity,  is  nothing  but  a  dry  and  hardened  rule  of  law.  It 
possesses  no  element  of  equity  in  any  popular  or  general 
sense.  It  is  imported  from  the  civil  law,  and  had  its  first 
application  in  English  jurisprudence  through  courts  of 
equity;  but  it  is  a  misnomer  to  call  it  an  equitable  rule  in 
the  popular  sense.  This  rule  holds  now  the  same  position 
in  the  law  as  that  occupied  by  the  right  of  stoppage  in 
transitu,  which  was  once  a  mere  equitable  right,  which 
courts  of  law  refused  to  recognize.  As  late  as  1690,  {Wise- 
WLdn  vs.  Vandenput^  2  Ver.,  20j),  the  courts  of  law  in  an 
action  of  trover,  held  against  the  right,  and  a  verdict  was  had 


20 


for  a  plaintiff  on  a  trial  of  issues  out  of  chancery,  where 
this  right  was  insisted  upon  by  way  of  defence.  Upon  the 
coming  of  the  verdict  into  chancery,  that  court  refused  to 
sustain  it,  and  held  the  plaintitf  could  not  recover,  because 
the  purchasers  or  consignees  having  paid  no  money  on  the 
goods,  and  having  become  bankrupt  since  the  purchase,  the 
consignors  had  the  right  to  get  the  goods  into  their  hands 
and  prevent  them  from  coming  into  the  possession  of  the 
bankrupts.  "It  was  but  lawful  for  them  [i.  e.,  the  consign- 
ors,] so  to  do,  and  very  allowable  in  equity."  But  who 
would  think  now  of  applying  the  term  equity  in  any  gene- 
ral or  popular  sense  to  this  beneficent  rule  ^  It  has  been 
strict  law^for  a  hundred  and  fifty  years.  [S^nith  vs.  (Bowers^ 
2  Esp.,  j^y8 ;  Harris  vs.  (Pratt,  7  jN.  Y.  (R.^  24g ;  Muller  vs. 
(Pondir,  55  JV.  Y.  CR.,  J2^,)  (Per  curta?n,  Allen,  J.,  (337)- 
*'  It  had  its  origin  in  a  court  of  equity,  but  has  become 
thoroughly  engrafted  upon  the  common  law,  and  is  now 
well  established  as  a  legal  right." 

But  the  term  equity  is  used  here  in  a  double  sense.  The 
insurance  companies  invoke  a  strict  rule  of  law,  which 
they  term  one  of  equity.  They  use  the  word  equity  for 
the  purposes  of  popular  appeal,  as  it  is  employed  by  writers 
on  the  science  of  government ;  meaning  thereby  one  of  the 
modes  for  reforming  strict  law,  which  the  creative  jurist 
invokes  when  a  wholly  new  case  arises.  Such  reforms  are 
sought  to  be  accomplished  by  legal  fictions,  by  equity — 
many  term  it  remedial  equity — or  by  legislation.  The 
modern  mind  in  this  country  and  in  England  prefers  the 
legislative  method,  and  hence  distinct  courts  of  equity 
have,  to  a  great  extent,  been  abolished,  and  we  do  not  tol- 
erate law-making  courts. 

Bentham  perhaps  led  the  way  in  this  by  his  condemnation 
of  judge-made  law;  but  he,  consciously  or  unconsciously, 


21 

followed    Lord  Bacon,  who  said,  in    his    (De  AugmentiSj 
[(B.  via.,  Apo.  7<5) ; 

"  Keep  within,  or  rather  on  tliis  side  of,  the  limits  of  the  example,  and 
on  no  account  go  beyond  them.  For  where  there  is  no  rule  of  law, 
everything  should  be  looked  on  with  suspicion  ;  and  therefore,  as  in  ob- 
scure cases,  be  very  careful  how  you  proceed." 

So  Mr.  Jefferson,  speaking  of  the  Louisiana  Code  [Letter 
to  Livingston,  2^th  March,  182^,)  "  One  single  object  will 
entitle  you  to  the  endless  gratitude  of  society,  'that  of 
restraining  judges  from  usurping  legislation." 

But  here,  as  has  been  abundantly  shown,  we  have  an 
absolutely  new  case  ;  and  the  proposition  is,  to  apply  to  it 
an  old  rule  of  law,  for  the  benefit  of  these  wealthy  claimants, 
when  there  are  no  analogies  which  justify  such  application. 
No  Court  would,  in  my  judgment,  venture  upon  such  a 
step. 

Says  Austin  [Jurisprudence,  vol.  2,  p.  640) : 

"  Another  very  common  error  is  to  suppose  that  equity  is  not  a  body 
of  laws  or  rules,  but  is  moulded  at  the  pleasure  of  the  tribunals;  that,  in 
short,  equity,  as  meaning  laws,  is  equity  as  meaning  the  arhitriuin  of  the 
judge.  This  is  an  error  of  which,  strange  as  it  may  appear,  even  English 
lawyers  of  considerable  reputation  have  been  guilty,  I  remember  that 
Mr.  John  Williams,  in  Parliament,  a  few  years  ago,  quoted  as  applicable 
to  the  Courts  of  Equity  of  the  present  day,  a  passage  of  Selden,  written 
200  years  ago,  in  which  he  describes  equity  as  being  regulated  by  the 
Chancellor's  conscience  ;  and  compares  such  a  mode  of  administering 
justice,  in  point  of  certainty,  to  the  regulation  of  it  by  the  length  of  the 
Chancellor's  foot.  This  description  is  altogether  inapplicable  to  the 
Chancellor's  jurisdiction  at  present,  when  he  is  as  much  bound  by  pre- 
cedents, and  has  as  little  left  to  his  discretion,  as  any  other  of  the  Judges. 
It  is  obvious  that  a  Court  which  does  not  follow  any  law  or  precedent, 
but  decides  arbitrarily  in  every  case,  could  not  exist  in  any  civilized  com- 
munity. For  by  the  uncertainty  it  would  introduce,  it  would  defeat  all 
the  ends  of  law,  more  than  an  army  of  robbers." 

So  Maine  [Ancient  Law,  6^)  : 

"  A  time  always  comes  at  which  the  moral  principles,  originally  adopted, 
have  been  carried  out  to  all  their  legitimate  consequences ;  and  then  the 
system  founded  on  them  becomes  as  rigid,  as  unexpensive,  and  as  liable 
to  fall  behind  moral  progress  as  the  sternest  code  of  rules  avowedly  legal." 


22 

To  the  same  effect  (id.  p.  66): 

"  It  is  easily  seen  by  English  lawyers  that  English  Equity  is  a  system 
founded  on  moral  rules ;  but  it  is  forgotten  that  these  rules  are  the  moral- 
ity of  pasL  centuries — not  of  the  present — that  they  have  received  nearly 
as  much  application  as  they  are  capable  of,  and  that,  though  of  course 
they  do  not  differ  largely  from  the  ethical  creed  of  our  own  day,  they  are 
not  necessarily  on  a  level  with  it." 

Such,  then,  is  the  condition  of  a  court  of  equity,  so 
called.  It  is  incompetent  to  legislate  for  this  new  class  of 
cases.  The  subrogation  cases,  one  and  all,  cited  on  the 
other  side  do  not  touch  that  now  under  discussion.  In  each 
of  those  there  was  a  distinct  fund  to  which  the  individual 
assured  was  entitled  as  a  matter  of  strict  right.  A  fund 
which  he  could  collect,  and  which  was  ready  to  be  paid. 
Here  the  question  is,  who  shall  have  a  share  in  the  fund  '? 
The  proposition  is  to  extend  the  rule  of  subrogation,  and 
allow  insurers  who  are  not  losers  to  take  in  lieu  of  losers 
who  were  not  insured,  because  the  court  in  some  of  its  in- 
terlocutory discussions,  for  international  purposes,  ruled  in 
a  particular  way,  though  they  afterwards  rendered  a  gene- 
ral verdict. 

Says  Blackstone  [(Bk.  3,  p.  432) : 

"  It  has  been  said  that  a  court  of  equity  is  not  bound  by  rules  or  prece- 
dents, but  acts  upon  the  opinion  of  the  judge,  founded  on  the  circum- 
stances of  every  particular  case.  Whereas  the  system  of  our  courts  of 
equity  is  a  labored  and  connected  system,  governed  by  established  rules, 
and  bpund  down  by  precedents,  from  which  they  do  not  depart,  although 
the  reason  of  some  of  them  may  be  liable  to  objection." 

So,  too,  Mitford  (p.  428) : 

"  The  distinction  between  law  and  equity  is  never,  in  any  country,  a 
permanent  distinction;  law  and  equity  are  in  continual  progression,  and 
the  former  is  certainly  gaining  ground  upon  the  latter.  A  great  part  of 
what  is  now  strict  law,  was  formerly  considered  as  equity,  and  the  equi- 
table distinctions  of  this  age  will  unavoidably  be  ranked  under  the  strict 
law  of  the  next." 

So  then  Mr.  Van  Cott  was  accurate  in  the  language  he 
employed  before  the  Committee,  when  he  spoke  of  the 
"  technical  right  of  subrogation." 


23 

For  the  purpose  of  the  distribution  now  sought,  the 
rules  of  equity  as  recognized  in  the  books  are  entirely  in- 
appHcable.  Congress  must  declare  rules  applicable  to  this 
new  case. 

**  Many  writers  of  treatises  on  equity,  struck  with  the  completeness 
of  the  system  in  its  present  state,  commit  themselves  expressly  or  im- 
plicitly to  the  paradoxical  assertion,  that  the  founders  of  the  chancery 
jurisprudence  contemplated  its  present  fixity  of  form  when  they  were 
settling  its  first  cases.  Others,  again,  complain — and  this  is  a  grievance 
frequently  observed  upon  in  forensic  arguments — that  the  moral  rules  en- 
forced by  the  Court  of  Chancery  fall  short  of  the  ethical  standard  of  the 
present  day.  They  would  have  each  Lord  Chancellor  perform  precisely 
the  same  office  for  the  jurisprudence  which  he  finds  ready  to  his  hand 
which  was  performed  for  the  old  common  law,  by  the  fathers  of  English 
equity.  But  this  is  to  invert  the  order  of  the  agencies  by  which  the  im- 
provement of  the  law  is  carried  on.  Equity  has  its  place  and  its  time ; 
but  I  have  pointed  out  that  another  instrumentality  is  ready  to  succor  it 
when  its  energies  are  spent." — Maine'' s  Ancient  Lazu,  p.  66-7. 

The  instrumentality  referred  to  by  Mr.  Maine  is  legisla- 
tion, and  that,  these  uninsured  claimants  now  invoke. 
But  one  case  has  been  cited  in  the  whole  of  this  discussion 
which  has  any  real  bearing  on  the  question  involved.  I 
refer  to  Campbell  vs.  Mullett,  2  S-wanston^  551.  This  case 
was  ruled  by  Sir  Thomas  Piomer,  M.H.,  after  argument  by 
Sir  Samuel  Romilly,  and  all  the  other  eminent  counsel  of 
the  time.  The  Master  of  Rolls  refused  to  apply  to  a  case 
like  the  present,  the  doctrine  of  subrogation,  or  to  recognize 
strict  legal  rights  as  affecting  such  a  fund  as  this.  And 
though  the  case  was  twice  argued  and  involved  a  large  sum, 
it  was  never  appealed  from,  and  stands  as  law  to-day.  And 
yet,  Mr.  Romilly  may  be  supposed  to  have  known  the  law, 
nor  did  he  lack  pertinacity. 

There  never  sat  on  the  English  bench  a  more  competent 
judge  of  such  questions  as  are  here  involved.  All  Mr. 
Plomer's  studies  and  great  professional  engagements  made 
him  conversant  with  the  general  principles  and  mode  of 
reasoning  which  justify  us  in  considering  him  the  statesman- 


24 

judge  of  his  time.  He  said  a  fund  like  this  was  a  "donation, 
not  restoration  of  a  former  right,  but  from  a  new  fund 
belonging  to  an  independent  authority,  a  grant  to  the 
sufferer  for  what  he  had  lost."  And  so  he  refused  to  allow 
the  co-partner  of  that  sufferer  to  share  in  such  a  donation, 
though  the  elementary  principles  of  co-partnership  law,  if 
applied  to  the  case  would  have  admitted  him.  Then  what 
have  we  here  ?  Nothing  but  a  general  fund,  a  donation 
applicable  under  no  legal  rules,  beyond  the  reach  of  the 
instruments  which  apply  those  rules  between  individuals, 
but  awarded  to  the  Government  in  full  satisfaction  ot  all  its 
claims  against  Great  Britain,  "  gencrically  known  as  Alabama 
Claims."  Of  course  it  is  a  fund  to  be  applied  by  the  gov- 
ernment for  the  indemnification  of  those  who  actually  lost 
by  the  acts  complained  of;  not  for  the  enrichment  of  those 
who  did  not  suffer  loss  from  such  a  cause  ;  and  to  be  applied, 
not  according  to  technical  rules,  not  in  pursuance  of  musty 
precedents  which  are  bapt'ized  into  the  name  of  "  equity  " 
to  mislead  the  unthinking,  but,  to  use  the  language  of  Mr. 
Yeaman  in  his  elaborate  Study  of  Government,  (p.  409), 
upon  principles  which  "  rest  in  the  conscience  and  sense  of 
justice  of  the  sovereign  power." 

The  Insurance  Companies  are  so  earnest  in  their  desire 
to  appear  before  some  court  which  can  act  upon  their 
claims,  unhampered  by  rules  fixed  by  Congress,  that  it 
seems  proper  to  illustrate  the  beauty  and  practicability  of 
tlieir  notion  by  a  bit  from  recent  English  experience. 

In  1871  Parliament  passed  the  Albert  Life  Assurance 
Association  Act  {^4  Vic.^  c.  ji  Local  J.ct).  The  failure  of 
that  corporation  had  raised  so  many  complicated  questions, 
and  presented  such  a  prospect  for  legal  controversy,  that  it 
was  thought  best  to  cut  the  knots,  and  get  all  the  questions 
out  of  Parliament,  and  the  controversies  out  of  the  courts. 


25 

by  sending  the  whole    matter   to  an  Arbitrator.     The  Act 
contained  this  extraordinary  provision: 

"  The  arbitrator  may  settle  and  determine  the  matters  by  this  Act 
referred  to  arbitration,  not  only  in  accordance  with  the  legal  or  equitable 
rights  of  the  parties,  as  recognized  in  the  courts  of  law  and  equity,  but 
upon  such  terms  and  in  such  manner  in  all  respects  as  he  in  his  absolute 
and  unfettered  discretion  may  think  most  fit,  equitable,  and  expedient, 
and  as  fully  and  effectually  as  could  be   done  by  Act  of  Parliament." 

Lord  Cairns  was  appointed  Arbitrator,  and  clothed  with 
these  broad  powers  he  proceeded  to  hear  and  determine  the 
various  original  questions  which  were  raised ;  questions  upon 
which  little  light  was  thrown  by  the  adjudications  of  the 
courts.  In  the  meantime  the  European  Insurance  Company 
failed,  and  an  Arbitration  Act,  almost  identical  in  its  terms, 
was  passed,  to  dispose  of  the  controversies  arising  under  it. 
(55  ^^f^-;  ^-  ^45  Local  Act.)  Curiously  enough,  the  ques- 
tions presented  by  the  latter  failure  were  identical  with 
those  in  the  former. 

The  last  Act  was  bitterly  opposed  in  Parliament  and  by 
the  press.  The  Law  Magazine  and  (Review  {18^2,  JV.  S.^ 
vol.  1;  />  48o\  denounced  it,  and  spoke  of  the  previous 
Act  as  "  a  shocking  precedent." 

Lord  Westbury  was  appointed  arbitrator  under  the  second 
statute,  and  proceeded  to  hear  the  cases.  His  investigation 
was  most  painstaking  and  cautious.  Of  the  law  he  said  : 
"It  is  only  justified  by  necessity,  and  its  necessity  is  a 
great  reproach  to  the  judicial  institutions  of  the  country." 
{Law  Magazine  and  (Review,  iS^2,  JN .  S.,  vol.  2,  p.  jjS ) 

Here  were  then  two  most  eminent  equity  lawyers,  and 
ex-Lord  Chancellors  engaged  independently  on  the 
same  questions,  Lord  Cairns  being  in  advance.  Unfortu- 
nately, however,  for  the  litigants,  these  two  experienced 
lawyers  and  statesmen  came  to  precisely  opposite  conclu- 
sions on  the  question  of  novation,  upon  which  the  whole 
distribution,  and  the   mode  of  assessment   turned,  and   dis- 


26 

satisfaction  was  universal,  for  parties  had  paid  in  money 
under  the  rules  adopted  by  Lord  Cairns.  There  was  no 
help  for  any  one,  however,  and  so  a  set  of  parties  opposite 
in  interest  paid  in  under  the  rulings  of  Lord  West- 
bury.  But  Lord  Westbury  died,  and  Lord  Romilly 
succeeded  him.  He  did  not  agree  wholly  with  either 
ex-Lord  Chancellor,  and  on  the  main  question  he  dif- 
fered very  seriously  with  his  predecessor;  so  much  so, 
that  he  granted  re-hearings  in  some  cases  where  parties  had 
not  paid  in.     [Vide  "  Capital  and  Labor''  J^ov.  4,  28^4.) 

The  moral  of  all  this  is,  that  the  Legislature  should,  after 
ample  discussion — and  surely  it  has  been  ample  in  the  mat- 
^■er  of  the  distribution  of  the  Geneva  Award — settle  at  once, 
and  for  all  interested  parties,  the  rules  which  are  to  govern 
them  in  regard  to  the  distribution. 

But  it  is  said  this  Government  has  taken  the  fund  sub- 
ject to  a  trust  of  some  sort  in  favor  of  the  insurance  com- 
panies. Sometimes  it  is  called  a  legal,  and  sometimes  a 
moral  trust.  Neither  phrase  seems  to  be  satisfactory  to  the 
insurance  claimants.  It  is  a  trust  of  such  a  shadowy  and 
indefinite  character  that  counsel,  with  all  their  acuteness  and 
command  of  language,  are  unable  to  frame  for  it  any  exact 
definition.  All  the  facts  in  regard  to  the  transaction,  how- 
ever, controvert  the  claim. 

The  Johnson-Clarendon  Treaty  was  rejected  because  it, 
like  many  other  of  our  treaties,  (some  of  which  were  cited 
in  the  debate  in  the  Senate  on  this  subject  by  Mr.  Freling- 
huysen,  in  1873,)  provided  only  for  the  ascertainment  and 
settlement  of  the  claims  of  citizens  That  was  the  merit 
claimed  for  it  by  Mr.  Johnson  himself,  for  he  said,  (Mes. 
and  (boc.  i86g,  vol.  1,  p.  418)  "And  I  am  equally  satisfied 
that  if  the  Convention  goes  into  operation,  every  dollar  due 


A 


27 

on  what  are  known  as  the  Alabama  Claims   will    be  re- 
covered.'' 

The  Treaty  of  Washington,  on  the  contrary,  provided 
solely  for  national  claims.     Article  I.  provides  : 

"  Whereas  differences  have  arisen  between  the  Government  of  the 
United  States  and  the  Government  of  her  Britannic  Majesty,  and  still 
exist,  growing  out  of  the  acts  committed  by  the  several  vessels  which  have 
given  rise  to  the  claims  generically  known  as  the  Alabama  Claims;  *  * 
Now,  in  order  to  remove  and  adjust  all  complaints  and  claims  on  the 
part  of  the  United  States,  and  to  provide  for  the  speedy  settlement  of 
such  claims,  which  are  not  admitted  by  her  Britannic  Majesty's  Govern- 
ment, the  High  Contracting  Parties  agree  that  all  the  said  claims,  growing 
out  of  the  acts  committed  by  the  aforesaid  vessels  and  generically  known 
as  the  'Alabama  Claims,'  shall  be  referred  to  a  Tribunal  of  Arbitration,  &c." 

The  distinction  between  the  mode  of  presenting  national 
and  private  claims,  and  their  treatment  in  negotiation,  is  a 
marked  one,  and  is  fully  explained  and  illustrated  in  the 
report  prepared  by  Mr.  Sumner  for  the  Committee  on 
Foreign  Relations  on  French  Spoliations.  {fReport  of  Com.j 
jYo.  41,  ^8  Cong.,  1st  Ses.) 

Our  agent  and  counsel  were  distinctly  instructed  that  they 
were  to  present  simply  a  national  case,  and  no  other ;  they 
were  told  that  if  an  award  was  made  in  favor  of  this  Govern- 
ment by  the  only  person  in  the  whole  nation  who  could 
speak  for  it,  that  the  money  under  the  award  would  be 
received  without  any  trust  or  committal  as  to  the  mode  of 
distribution,  {Papers.  &c.,  Vol.  II.,  p.  416 ;  Vol.  III.,  p.  16  ■ 
Vol  III.,  p.3yo),  and  this  was  announced  to  the  Tribunal. 
It  stood  in  the  very  front  of  the  litigation;  and  in  distinct 
terms  the  Government  reserved  the  question  as  to  the 
insurance  claims. 

Why  was  this  done"?  Obviously,  because  the  Govern- 
ment has  always  dismissed  the  claim  of  insurance  companies, 
on  the  ground  that  they  were  paid  for  the  risk  they  took, 
and  could  not  ask  it  to  hold  them  harmless.  This  appears 
by  the  letter  of  Governor  Washburn,  cited  at  page  25  of  my 


28 

argument  of  1874.     And   of  all   this,  Great   Britain,   the 
Arbitrators,  and  the  wliole  world  had  notice. 

When  Sir  Roundell  Palmer,  in  the  paragraph  of  the 
British  argument  which  I  have  already  quoted,  referred  to 
the  claims  of  the  insurance  companies,  he  was  informed 
by  our  counsel,  distinctly,  but  politely,  that  who  the  private 
sufferers  were,  was  a  matter  of  no  concern  to  Great  Britain 
or  to  the  Tribunal.  The  whole  passage  is  as  follows, 
{(Papers,  ore,  vol.  ^,  p.  ^jo) 

"  So  far  as  Great  Britain  and  this  Tribunal  are  concerned,  who  the 
private  sufferers  are,  and  who  represents  them,  and  whether  they  are 
insured  or  not,  and  have  been  paid  for  clieir  insurance,  are  questions  of 
no  importance." 

The  Tribunal,  acting  upon  this  view  of  the  case,  decided 
not  in  favor  of  individual  claimants,  not  in  "  favor  of  indi- 
vidual claims,  not  on  specific  vessels,  but  rendered  a  general 
verdict,  like  the  verdict  of  a  jury,  of  $15,500,000,  "for 
the  satisfaction  of  all  the  claims  referred  to  the  considera- 
tion of  the  Tribunal,  conformably  to  the  provisions  con- 
tained in  x\rticle  VII.  of  the  aforesaid  Treaty." 

Look  now  to  that  Article,  and  see  what  the  Arbitrators 
intended  by  the  award.  They  had  before  them  the  notice 
that  this  Government  reserved  to  itself  wholly,  the  question 
ot  distribution.  They  had  also  the  right  to  send  the  whole 
case  to  a  Board  of  Assessors,  under  Article  X.,  and  have 
each  individual  claim  probed. 

But  they  did  nothing  of  the  kind.  They  made  a  general 
estimate  of  the  amount  of  damage,  in  the  way  that  I  have 
already  explained,  for  all  the  claims  referred  by  the  Treaty, 
not  for  a  part  of  them,  and  awarded  a  gross  sum.        ,         '^  • 

And  why  did  our  Government  insist  upon  this  cour^e-^ 
The  answer  shows  the  prescience,  the  sound  sense,  the  ster- 
ling justice  of  those  by  whom  it  acted.  It  was  done  to  the 
end,  if  it  were  possible,  that  every  honest   sufferer   by  the 


29 

direct  act  of  every  one  of  the  insurgent  cruisers,  inculpated 
and  exculpated,  might  be  paid  to  the  full  his  real  loss ; 
and  who  more  truly  losers  than  the  uninsured  shipowners 
represented  here  by  me  ?  And  so  it  came  to  pass  that  the 
English  Government  concurred  in  this  view.  During  a 
debate  in  Parliament,  Mr.  Andrews  asked  : 

"  If  we  (z.  e.,  Great  Britain,)  were  obliged  to  pay  for  damage  sustained 
by  the  Americans,  by  reason  of  the  conduct  of  the  '  Alabama,'  why  we 
were  not  equally  bound  to  pay  for  "the  damage  sustained  by  our  own  sub- 
jects by  reason  of  the  acts  of  that  vessel  ?  " 

The  Premier,  Mr.  Gladstone,  replied : 

"  It  appears  to  be  implied  that  the  Government  submitted  the  claims 
of  certain  persons  not  subjects  of  Her  Majesty  to  arbitration.  This  is 
altogether  a  mistake.  No  claims  of  individuals  have  been  submitted  to 
arbitration  in  relation  to  the  'Alabama.'  What  was  submitted  to  arbitra- 
tion was  entirely  a  question  between  the  two  Governments."  (London 
Times,  May  24,  1873.) 

Where,  then,  is  the  support  for  this  undefinable  trust  ? 
Not  in  the  facts  connected  with  the  transaction.  Not  in 
the  mode  of  arriving  at  the  amount  of  the  award.  Not  in 
the  final  determination  and  recorded  general  judgment  of 
the  Tribunal.  It  exists  only  in  the  imagination  of  these 
insurance  claimants  and  their  advisers. 

The  refusal  of  the  Tribunal,  with  Article  X.  of  the  Treaty 
before  them,  to  require  an  investigation  of  private  claims,  is 
in  legal  effect  their  recorded  judgment  that  they  rendered 
no  decision  in  regard  to  distribution  or  payment,  binding 
upon  any  one  in  law  or  morals.  Their  judgment  terminated 
all  differences  between  the  two  countries  upon  the  matters 
specified  in  the  Treaty,  and  there  the  judgment  ends. 

With  the  adjournment  of  the  Geneva  Tribunal,  the 
greatest  legal  contention  in  history  terminated.  It  termi- 
nated with  honor  to  both  nations,  and  by  reason  of  it  they 
stand  to-day  far  in  the  lead  of  civilization,  and  of  peaceful 

425761' 


30 

progress.  Great  Britain  terminated  her  connection  with 
the  transaction  when  the  damages  were  paid.  The  mur- 
mur of  dissent  heard  from  her  shores  "  was  but  the  echo 
of  the  real  verdict"  of  approval  and  satisfaction.  It  now 
remains  for  our  own  Government  to  put  the  fitting  crown 
upon  this  great  transaction  ere  it  passes  forever  into  his- 
tory, by  so  distributing  this  award  as  to  secure  to  every 
man  in  the  nation  who  suffered  a  direct  loss,  by  the  acts  of 
any  one  of  the  insurgent  cruisers,  the  full  measure  of  his 
real  damages.  For  this  purpose  the  fund  is  abundant,  the 
equity  is  clear,  and  the  right  and  power  of  the  Government 
is  indisputable. 

It  remains  for  me  to  thank  the  members  of  the  Committee 
for  the  patience  with  which  they  have  listened  to  my  share 
of  this  discussion,  which  had  already  been  so  greatly  ex- 
tended. 


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